Would it be the end of the world? Would it mean that the hopes and dreams of buying a home would be forever dashed? Would anyone ever qualify to buy a home again? The way that many are talking would lead us to believe that the answer to all 3 questions would be 'yes'. But that is not necessarily the case. The broader outlook is that the economy has to improve and that does not mean Ben Bernanke telling us it has improved. It means that consumers have to have confidence that their jobs remain stable. And if a home purchase is to be made, that it will not be a bad decision. The 'cash for clunkers' auto purchase program was a red herring. Some people bought cars who might not have without the program. But, now they have higher payments, insurance costs, etc. And now car sales are hurting once again.
Buying a home is serious business. And having a housing budget is the most important consideration in buying a home. The presence of a tax credit that is going away in 7 weeks should not be a factor. If your rent is $700 a month and you are saving $500 a month, that does not mean you should plan to spend $1200 for housing. And certainly not more than that. Home repairs and unforeseen expenses that the landlord presently covers will now be your responsibility. I always ask prospective home buyers what is the comfort level in writing that monthly check to cover housing [principal, interest, taxes, insurance, mortgage insurance] expenses. What the maximum qualifying number might be could be higher than the comfort level.
Buying the wrong home just so you get the tax credit is not a good reason to put down a deposit to purchase. Buying before you are ready is also a big mistake. It is much better to find the right home at the right time than the wrong home right now. Not every mortgage professional or real estate professional will give you that advice. So it is important to be in a position to make a decision based on well thought out logic than to succumb to pure emotion. Buying smart will always be the best way to go.